Statement of the Hon. Barbara Kennelly, President and Chief
Executive Officer,
National Committee to Preserve Social Security and
Medicare,
and former Member of Congress
Before the Subcommittee on Social Security,
House Committee on Ways and Means
Hearing on Challenges Facing the New Commissioner of Social Security
May 2, 2002
Good morning Chairman Shaw, ranking Member Matsui and distinguished members of the Subcommittee. I am Barbara Kennelly, President and Chief Executive Officer of the National Committee to Preserve Social Security and Medicare. With millions of members and supporters across America, the National Committee is a grassroots advocacy and education organization devoted to the retirement security of all citizens – from the “twenty-something” generation and baby boomers to the nation’s 34 million seniors.
Mr. Chairman, Ranking Member Matsui, thank you for your leadership on Social Security issues. I appreciate the opportunity to testify today. This is a fitting debut in my new position, and an ideal way to begin my tenure at the helm of the National Committee. I look forward to working closely with both of you and all of the Members of the Committee. Hopefully you will allow me to visit with each of you. Your expertise is invaluable to me.
I am also pleased to be here with Social Security Commissioner, Jo Anne Barnhart. I wish her success in leading the Social Security Administration (SSA) upon which millions of people rely for their earned benefits, and that most others look to as a financial safety net that will be there when they need it. We anticipate working with the Commissioner and with this important Subcommittee to ensure that Social Security continues to meet the needs of working Americans and their families.
As a former Ranking Member of this Subcommittee, and more recently Counselor to Commissioner Apfel and Associate Commissioner on Retirement Policy at SSA, I have a strong sense of the challenges facing Commissioner Barnhart. Those challenges include the following:
· Pending retirements at SSA;
· Streamlining and modernizing access to benefits and information;
· Eliminating unnecessary delays in the disability claims process; and
· Ensuring the long-range solvency of the Old Age, Survivors and Disability Insurance programs.
Chairman Shaw, I know that under your leadership, the Subcommittee has had a full agenda. We share your recent concern about the misuse of personal data held by Social Security, the misuse of benefits by representative payees, and we applaud your efforts to highlight the continued response of SSA to those directly affected by the tragedies of September 11.
SSA has many strengths. It is one of the most effective agencies in the federal government. Each year, SSA efficiently tracks the lifetime wages of nearly every American worker. Each month, the agency sends out benefits for over 46 million Americans with clockwork efficiency. All this, including the claims processing, is done with administrative costs of less than 1 percent. SSA provides service to the American people with a level of success that rivals the performance of the best companies in the private sector.
Americans not receiving a check still benefit from the program’s disability and survivor insurance provisions. Each year, 135 million working Americans rely on Social Security for disability insurance. In fact more than 30 percent of Americans receiving a monthly check from SSA are non-retirees. Each month, about 4 million children and 5 million disabled workers receive benefits.
In the short term, Commissioner Barnhart faces the challenge of ensuring that the agency continues to efficiently provide benefits that keep millions of people out of poverty. In the longer term, the Commissioner faces the demographic, technological and management challenges I mentioned earlier. I would like to discuss those challenges in greater detail.
One major reason for the success of SSA is its skilled and dedicated workforce. By 2009, over half the agency’s 63,000 employees will be eligible for retirement. SSA may also lose most of its senior management to retirement by the end of this decade, just as the agency’s workload is expected to dramatically increase. Initiatives are underway to prepare for this, but the agency needs additional resources to remain ahead of the curve and ensure seamless public service.
The burden on SSA is lightened when the public accesses benefits and information electronically, through e-mail, the Internet, and direct deposit for beneficiaries. These new technologies and new ways of reaching beneficiaries provide cost savings to the agency and convenience for those who are served. We need to improve on the fact that only 3.5 percent of retirement claims are handled over the Internet. However, I urge the Administration not to set an overly ambitious goal. Many seniors are adept at using the web, but for many, there is a reluctance to embrace the new technology. The goal of raising the level of Internet or automated telephone service delivery to 67 percent by 2005 should be reviewed.
For a variety of reasons, conventional means of accessing benefits, assistance and information should always be an option for those who choose it. Beneficiaries should be able to speak or write to an agency representative in person about a problem if they need to do so. This kind of access puts a human face on the agency and enhances public confidence in the program. Hence, it is imperative that resources continue to be directed toward this type of personal service, including maintenance of existing local and regional offices.
Eliminating Unnecessary Delays
The excessive lag time in processing disability claims, particularly appeals from a denial of a disability claim, is clearly an issue that demands attention. The process of evaluating a claim is inherently complex and the current system is antiquated. We can all agree that lag time in handling these claims is an issue that needs our attention now before it becomes more acute. This is one area where I believe that new technologies will be of great help. Mr. Chairman, we salute you and your staff who have devoted considerable time and effort to address this problem. We are pleased to see that these efforts to improve in this area are a high priority for the Administration as well.
Thank you also for your efforts to ensure the integrity of beneficiary information and to prevent the misuse of the Social Security number. It is because Social Security has been such a successful universal program that the number has become overused for identity purposes. Use of Social Security cards must be limited to the accounting and records purposes of the Treasury Department and activities that are related to the mission of SSA. We salute the agency for its tremendous support of the investigative efforts following the recent attacks on our nation. Balancing privacy with broader public needs remains a big challenge as SSA considers its important role in the implementation of the USA PATRIOT Act.
We applaud the efforts of this Subcommittee to address existing inequities in the present Social Security benefits structure. Thank you Mr. Chairman for your leadership in repealing the earnings limit for seniors over age 65. We also appreciate your efforts in advancing the debate on the Government Pension Offset. The reform of the Government Pension Offset would address a long-standing unfairness.
In addition to the Government Pension Offset, there is a second issue that is particularly sensitive to women: the Windfall Elimination Provision. As you know, Congress created a modified formula for determining monthly Social Security benefits to eliminate any windfall to individuals who worked in jobs that were not covered by Social Security, but receive benefits that were computed as if they were long-term, low-wage workers. We believe that the Windfall Elimination Provision should be modified.
It is my hope that we can move to address the real disadvantages women face under our current Social Security system. Women remain our society’s primary family caregivers, and they still earn less than men on average, even for similar work. Also, for the same reasons, women generally do not have the same access to pensions or other types of retirement income. One sensible reform would be to leave out of the benefit calculation any years during which an individual had zero earnings due to family caregiving responsibilities. An increase in the benefit for surviving spouses should also be considered as well as a restoration of the minimum benefit. We are pleased to see promise for improvement in some specific women’s benefit issues through the introduction of your legislation, H.R. 4069, the Women’s Benefits Improvement Act.
I hope that we all can agree that the greatest challenge facing the new Commissioner is her role in the effort to ensure the long-term solvency of the retirement and disability trust funds for future generations.
Assuming no changes, Social Security will be fiscally strong for the next 39 years. Beyond 2041, however, tough choices will need to be made to close the projected 29 percent solvency gap. Every generation must be guaranteed full benefits. The National Committee does not support efforts to partially privatize Social Security. We oppose the transformation of Social Security from an insurance program that offers everyone a defined benefit to an investment vehicle based on a defined contribution that favors those with higher incomes and uninterrupted work histories. We share the Administration’s desire to create new opportunities for younger workers to save and invest. But we believe that personal savings and investment must be in addition to the current baseline benefit provided by Social Security.
There are honest disagreements over how best to ensure the future solvency of the Social Security program, but I can safely say there is at least one point on which we can all agree: the sooner decisions are made, the easier they will be to implement and the less painful they will be for all stakeholders. We also believe that the debate over how improve the solvency of the Social Security program should include the broadest possible range of alternatives. The Commissioner of Social Security must be an integral part of this debate as well.
Public Education
I trust that our new Commissioner will work to ensure that Americans of all ages become better educated about the value of Social Security in their lives. Too many younger Americans are encouraged to question whether Social Security be there for them when they retire, without understanding that it is there for them now, as insurance should they or their parents die or become severely disabled. Social Security not only lifts more than half of our nation’s retirees above the poverty line, it provides protection and financial relief to Americans of all ages against the “hazards and vicissitudes of life.” I feel confident that Commissioner Barnhart’s agenda will include an educational endeavor to help current and future beneficiaries understand the value of the Social Security program in our daily lives.
Thank you Mr. Chairman for holding this hearing and extending this opportunity to speak. I also want to thank you for your strong leadership on this Subcommittee and your sustained work to improve the performance of the agency. On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare we look forward to working with you, your colleagues, and Commissioner Barnhart as you move forward in the 107th Congress to accomplish your mission.